Saudi Arabia's continuous efforts to tackle unemployment

Much to the credit of the Saudi authorities, the kingdom stands out for the regular release of details concerning unemployment numbers. Not all of Gulf Cooperation Council (GCC) countries are as forthcoming as Saudi Arabia with regards to the commitment to bring out such vital stats on a sustained basis.

Official data from the Central Department of Statistics and Information put the unemployment rate in Saudi Arabia at 5.5 per cent in the fourth quarter of 2013, down from 5.6 per cent in the third quarter.

However, these are inclusive of foreign nationals working in Saudi Arabia, which is home to some eight million workers or almost double the size of the local workforce. The majority comes from south Asia, notably India, and southeast Asia, like the Philippines, as well as Egypt, whose nationals have the advantage of knowing Arabic.

By definition, there ought to be zero unemployment among foreign nationals, as they are contract workers for specific jobs. Anyway, the jobless rate for expatriates stands at a mere 0.2 per cent of the total expat workforce and therefore statistically insignificant.

The unemployment rate for locals stood at 11.5 per cent by end 2013. Worse, the figure was as high as 32 per for Saudi females excluding those electing to be not regarded as part of the workforce.

Trouble is the authorities include foreign nationals when talking about total jobless rate, and accordingly distort the stats. The number of unemployed should be divided by the size of local force in order to make proper statistical inferences.

Remittances

The fact that Saudi Arabia ranks second only to the US with regards to amount of outflow of remittances tells a great deal about the extent of foreign nationals working in the kingdom. Remittances stood at nearly $30 billion in 2012.

It is suggested that Saudi Arabia ranks second to none in the world with respect to economic significance of the remittances, accounting for around 4 per cent the country's GDP.

Saudi Arabia is the largest source of remittances to India, amounting to about $8.5 billion (Dh31.2 billion), according to World Bank statistics.

Not surprisingly, Saudi authorities continue exploring ways and means of ensuring that nationals assume desirable jobs offered in the market. One fresh proposal being floated calls for restricting the number of years any expatriate can work in Saudi Arabia to eight in total.

Certainly, this is not popular with private sector investors and establishments, in turn desiring to maintain some foreign workers because of their skills and experience.

This proposal is seen as part of Nitaqat, which went into effect in July 2013. The scheme is meant to make a Saudi national the employee of choice in the private sector.

Various sectors

Currently, Saudi nationals comprise a mere 10 per cent of employment in the country's private sector.

The extent of local employment that Nitaqat requires varies from 6 per cent in the construction sector, 30 per cent for oil and gas extraction, and 50 per cent for banks and financial institutions. Understandably, nationals like to work in the financial services sector and reflective of the career opportunities and compensation.

Developments relating to the placement of a cap on the number of years working in Saudi Arabia plus Nitaqt come on top of restricting some 40 jobs to locals, including training and purchasing managers, public relations officers, debt collectors, tellers, data handlers, librarians, booksellers, and auto salesmen.

Clearly, Saudi officials cannot overlook the fact that one-third of locals are below the age of 15 with many bound to enter the job market seeking proper employment.